According to the Income Tax Act, senior citizens can claim a deduction of up to Rs 50,000 (as of FY 2024-25) for medical expenses related to the healthcare of eligible parents within a financial year.

As senior citizens, individuals aged 60 and above have unique opportunities to optimize their tax savings. One such avenue is through Section 80D of the Income Tax Act, which provides deductions for medical expenses and health insurance premiums. In this blog, we'll explore how senior citizens can maximize their tax savings under Section 80D and make the most of this beneficial provision.

What's the Maximum Tax Deduction Senior Citizens Can Claim for Medical Expenses?

According to the Income Tax Act, senior citizens can claim a deduction of up to Rs 50,000 (as of FY 2024-25) for medical expenses related to the healthcare of eligible parents within a financial year. If you're 60 years or older, you're eligible to claim this maximum deduction for your medical expenses or health insurance premium.

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Let’s understand tax deductions under Section 80D for senior citizens better with the help of the following table:

Individual Paying Health Insurance Premium

Tax Deduction under Section 80D (FY 2024- 25)

Maximum Tax Deduction under Section 80D

 

 

For Individuals

For Senior Citizens

If the premium is paid by the senior citizen himself

N/A

Rs 50,000

 

Rs 50,000

If the premium is paid by an individual < 60 years but parents are senior citizens

Rs 25000

Rs 50,000

Rs 75000

If a senior citizen pays his/her premium and his senior citizen parents’ premium

Rs 50,000

Rs 50,000

Rs 100,000

 

Tax Deduction Limits Under Section 80D in Various Situations

Under Section 80D, you're eligible to claim tax deductions of up to Rs 50,000 for expenses including preventive health check-ups, health insurance premiums, medical expenditures for yourself and your family, and contributions to the Central Government Health Scheme (CGHS) if you're a senior citizen. However, for preventive health check-ups, the maximum deduction limit is Rs 5,000 per financial year, which is part of the overall Rs 50,000 deduction limit for senior citizens.

Eligible Inclusions for Medical Expenses for Tax Deduction Under Section 80D?

  • Medical expenses or diseases not explicitly defined in the Income Tax Act are ineligible for tax deductions under Section 80D. However, expenses related to doctor consultations, medicines, hospitalization, and medical devices like pacemakers and hearing aids qualify for deductions based on government amendments to the Act.
  • Additionally, Section 80DDB covers specific medical conditions such as AIDS, cancer, and Parkinson's disease. Non-senior citizens can claim deductions up to Rs 40,000, while senior citizens are eligible for deductions up to Rs 1,00,000 under this section. If the medical condition aligns with those listed, individuals can file a claim under Section 80DDB.
  • If a medical condition doesn't fall under Section 80DDB or if the limit is reached, individuals can still claim remaining medical expenses under Section 80D.

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How to Make Health Insurance Premium Payments for Tax Deduction Under Section 80D?

To qualify for tax deductions, opt for online payment methods when settling your health insurance premiums or medical expenses. Avoid cash transactions and instead utilize debit cards, credit cards, net banking, cheque payments, etc. Digital payment modes like UPI and mobile wallets are also viable options for covering medical costs or premium amounts.

However, cash payments are acceptable for preventive health checkups, which should be conducted periodically to safeguard against potential illnesses or diseases. Timely diagnosis ensures prompt access to appropriate treatment.

Documentation Needed for Tax Benefits

While the Income Tax Act doesn't prescribe a specific set of documents for claiming tax benefits under Section 80D, it's prudent to retain documentary evidence such as medical bills, medication invoices, diagnostic test reports, medical history records, and doctor's prescriptions. These documents may be required for verification purposes in the future.

What is a preventive health check-up under 80D?

The government introduced preventive health check-up deduction in 2013-14 to encourage citizens to be more proactive towards health. Preventive health check-ups aim to identify any illness and mitigate risk factors at an early stage through frequent health check-ups.

Section 80D includes a deduction of Rs 5,000 for any payments made towards preventive health check-ups. This deduction will be within the overall limit of Rs 25,000/Rs 50,000, as the case may be.

This deduction can also be claimed by the individual for himself, his spouse, dependent children, or parents. The payment for preventive health check-ups can be made in cash.

For Example:

Arjun has paid a health insurance premium of Rs 23,000 for the health insurance of his wife and dependent children in the financial year 2023-24. He also had a health check-up done for himself and was paid Rs 5,000.

Arjun can claim a maximum deduction of Rs 25,000 under Section 80D of the Income Tax Act. Rs 23,000 has been allowed towards the insurance premium paid, and Rs 2,000 has been allowed for a health check-up. The deduction towards preventive health check-ups has been restricted to Rs 2,000 as the overall deduction cannot exceed Rs 25,000 in this case.

Arjun can claim up to Rs 25,000 for the premium paid on his policy. As for the policy taken for his father, a senior citizen, Arjun can claim up to Rs 50,000. In the given case, the deduction allowed is Rs 25,000 and Rs 35,000. Therefore, the total deduction he can claim for the year is Rs 60,000.

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In Conclusion

When filing your income tax return for the upcoming financial year or providing proof at the end of the current one, remember to include your medical expenses. If you're covering premiums or medical bills for senior citizens or elderly parents, you're eligible to claim those expenses as well.

FAQs on Maximizing Tax Savings for Senior Citizens under Section 80D

What is Section 80D?

Section 80D of the Income Tax Act provides deductions for payments made towards medical insurance premiums and preventive health check-ups.

Who qualifies as a senior citizen under Section 80D?

Individuals aged 60 years and above are considered senior citizens for tax purposes under Section 80D.

What are the maximum tax deductions available under Section 80D for senior citizens?

Senior citizens can claim a maximum deduction of up to Rs 50,000 for medical insurance premiums, preventive health check-ups, and medical expenses for themselves and their family members.

Can a senior citizen claim deductions for health insurance premiums paid for family members?

Yes, senior citizens can claim deductions for health insurance premiums paid for themselves, their spouse, dependent children, and parents, subject to the overall limit of Rs 50,000.

Are preventive health check-up expenses eligible for tax deductions?

Yes, preventive health check-up expenses are eligible for tax deductions under Section 80D. However, the maximum deduction allowed for such expenses is Rs 5,000 within the overall limit of Rs 50,000 for senior citizens.

Can contributions to the Central Government Health Scheme (CGHS) be claimed for deductions?

Yes, contributions made to the Central Government Health Scheme (CGHS) are eligible for deductions under Section 80D for senior citizens.

How can senior citizens maximize tax savings under Section 80D?

Senior citizens can maximize tax savings by fully utilizing the deduction limit of Rs 50,000 for medical insurance premiums, preventive health check-ups, and medical expenses for themselves and their family members. Additionally, they should ensure timely payment of premiums and keep records of all eligible expenses for accurate tax filing.

Is there any specific documentation required to claim deductions under Section 80D?

Yes, taxpayers need to provide documentary proof such as premium receipts, medical bills, and preventive health check-up reports to claim deductions under Section 80D.

Can tax deductions under Section 80D be claimed along with deductions under other sections?

Yes, tax deductions under Section 80D can be claimed along with deductions under other sections of the Income Tax Act, such as Section 80C for investments in specified instruments like PPF, NSC, etc.

Where can senior citizens get more information regarding tax savings under Section 80D?

Senior citizens can refer to the official website of the Income Tax Department or consult with a tax advisor for detailed information and guidance on maximizing tax savings under Section 80D.